Why ‘ETH-Merge’ is called a heave for fraudsters and scammers | The Financial Express

Why ‘ETH-Merge’ is called a heave for fraudsters and scammers

It is to be further noted that the Merge executed under the pretext was to upgrade to ETH2.0 or get ETH from the proof-of-work chain.

Why ‘ETH-Merge’ is called a heave for fraudsters and scammers
Scams involving the Merge had a success rate of 83% of the time on September 15, the day of the merger, and 100% of the time on several other days before and after the Merge

Six weeks post the Ethereum Merge, on the day that is September 15, 2022, the number of scams rose over $905,000 against $74,000. This once again brought the limelight on the rise in scams and volatility of the market. “At the time of the Ethereum Merge, there was an apprehension that there could be two Ethereum tokens, one for the Proof-of-Stake (PoS) blockchain and the other for the older Proof-of-Work (PoW) blockchain. Scammers took full advantage of this uncertainty. The target was the gullible retail user; the most common modus operandi was to tell victims to send the scammers some amount of cryptocurrency – to receive more in return,” Rajagopal Menon, vice president, WazirX, a cryptocurrency exchange company, told FE Blockchain.

It is to be further noted that this was based on the pretext to upgrade to ETH2.0 or get ETH from the PoW chain. Surprisingly, scams involving the Merge had a success rate of 83% on September 15, and 100% on several other days before and after the Merge, Chainalysis noted.

Also Read: Crypto market turns red amid fear of economic recession; Ethereum drops seven percent

Source: Chainalysis

Furthermore, this has led to the questioning of the potential of Ethereum 2.0. “Block productions will be centralised; however, the block validation still remains highly decentralised. This could lead to the centralisation of power within the Ethereum Foundation and a loss of trust in the platform by users,” Robert Balazs, co-founder, and CEO, ByteX, a cryptocurrency exchange, said.

Also Read: Cryptocurrency market plunges in chaos; Bitcoin miners sell actively

Chainalysis further noted nations that engaged in both Merge and non-Merge suffer from scams more frequently than the average nation. Both the United States and India fall into this category. According to Edul Patel, CEO and co-founder, Mudrex, the cryptocurrency industry should learn from the spike in Ethereum scams and educate investors.

Source: Chainalysis

Furthermore, as per cryptocurrency express, the scams were perpetrated by a group of people who created fake accounts on social media and forums using the names and images of well-known members of the Ethereum community. “They then used these accounts to promote a fake version of the Ethereum 2.0 protocol, which would have resulted in the loss of funds for anyone who participated,” Sayan Roy, co-founder, ByteX, said.

Also Read: Crypto market in ‘red’ after Binance pulls out of FTX-deal

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First published on: 28-11-2022 at 09:02 IST